February 2010
There was not much activity on the Initial Public Offerings side of things in 2009. Will 2010 be better and will emerging markets and frontier markets take the lead, asks Mike Gallagher 2009 will not be remembered as the year of the IPO, not surprisingly, given that good news was hard to find, especially with real estate prices hitting the skids throughout the region, Sukuk going into default, stock markets plunging, oil prices bouncing all over the place and Kuwait almost seeing a run on its banks in the early part of the year.
Investors have been left almost comatose by the beating they have taken and the announcement that DP World was looking to list on the London Stock Exchange, after being disappointed by its performance on NASDAQ Dubai was another sign of the times. In March 2009 the Board of DP World said it would evaluate all available options to address its continued disappointment with the markets valuation of the company.
"After an extensive period of review with advisers, and discussions with shareholders, the Board of DP World has decided to seek a premium listing on the London Stock Exchange whilst maintaining the existing primary listing on NASDAQ Dubai. It is currently envisaged that we will seek admission for listing in the second quarter of 2010," the port operator said in a recent statement to the media.
"The company is trading at a substantial discount to its international peers," Rami Sidani, at Schroder Investment Management in Dubai told Bloomberg. "This move means more visibility for the company, as well as greater credibility as an international player."
Initial Public Offerings have been thin on the ground. Reflecting the general state of the regional IPO market, the year-end IPO update by Ernst & Young pointed out that total regional IPO deal values in all of 2009 came in at approximately one-sixth the value of all IPOs in 2008. Middle Eastern markets raised $2.06 billion from 15 IPOs until 25 November 2009 compared to $12.46 billion in all of 2008.
Of the four regional IPOs between October and November of 2009, three were Saudi Arabian insurance companies and one bank in Syria. Syria's Albaraka Bank was the biggest IPO raising $37.23 million followed by Saudi Arabia's Gulf General Cooperative Insurance Company (Al Khaleej Insurance) at $21.3 million. Al Alamiya Cooperative Insurance Company and Buruj Cooperative Insurance Company, both from Saudi Arabia, raised $16 million and $13.87million, respectively.
According to Phil Gandier, Managing Partner, Transaction Advisory Services, Ernst & Young Middle East, "In 2009 IPO activity was concentrated in three countries; Qatar raised $952.03 million, Saudi Arabia raised $1.03 billion and Syria raised $76.99 million in 2009. There has been no IPO activity in any other country in the Middle East in 2009. It is difficult to foresee with any certainty when the IPO activity will pick up even though as many as 114 IPOs have been announced."
Uncertainty continues to affect the markets, with some forecasts writing off 2010 in its entirety, however others are more optimistic and expect to see confidence returning before the end of the second half of the year. Mazaya Qatar Real Estate Development Company said that the IPO on its stock was scheduled for January 2010.
Saudi Arabia's Herfy Food Services is also said to be looking at a listing around eight million shares on the Tadawul in the early part of 2010 for around $20 million, perhaps reflecting an expected rise in the price of soft commodities. Zawya Dow Jones also reported that Al Aqeeq Real Estate Development Co. plans to increase its capital by 50 per cent and the sale of SAR 700 million ($186.64 million) Islamic bonds.
In Kuwait, Gulf Holding Company (GHC) hired CapCorp Investment Company as a consultant for listing its shares on the Kuwait Stock Exchange, although there was no word on when the listing was likely to take place.
Commitment
Mazaya Qatar said that its decision to offer its shares for public subscription reflects its "commitment to carrying out its planned strategy of developing ambitious real estate projects" and entering real estate consortiums in Qatar.
Libya could make headlines in 2010, just like Syria did in 2009 when it launched its stock market. The Libyan bourse went live in 2007 and according to a report by Global Investment House, a number of IPOs are planned in 2010. The report claims that the Libyan Government is going through "material changes" in its regulatory capital market authority to conform to the international norms, in order to attract regional, as well as international investors into the stock market in 2010. There are currently 10 listed companies on the Libyan Stock Market.
"The activation of the Libyan Stock Market is a move from Libya towards integrating its economy in the international economy," said Global.
Even Iraq's stock exchange (ISX) is seeing some activity. A report by Aswat al-Iraq noted that the ISX held 13 sessions in December 2009 during which 14 billion shares exchanged hands at 23.717 billion Iraqi dinars ($20 million). Non-Iraqi investors purchased 1.955 billion shares worth 3.610 billion Iraqi dinars while the number of shares sold by non Iraqis was 407 million worth 591 million Iraqi dinars.
Aswat al-Iraq reported that the ISX saw its first e-trading session on 19 April 2009 with five registered companies, three banks and two hotels. The banks were: Ashur International Bank (AIB), Al-Mansour Bank and the Iraqi Credit Bank while the hotels were: Ashtar Hotel and
Al-Mansour Hotel.
"On 7 June, the Iraqi Middle East Investment Bank and the Warka Bank joined the electronic trading sessions," Aswat al-Iraq said.
However, Metito, the UAE-based utilities provider, is unlikely to go for an IPO this year and may opt to concentrate on aggressive expansion first, according to a report in Emirates Business 24/7. "These are young investments so we have to spend enough time to grow them before we consider exits," Karim El Solh, Gulf Capital's Chief Executive told the newspaper. The Abu Dhabi-based private equity house owns Metito, which specialises in water treatment and desalination systems. "Plus the market will recover probably by 2011 so think of 2010 as the year of consolidation and growth; and by 2011-2012 we'll start exiting some of our investments," El Solh said.
Opportunities
In late 2009, Daman Investments launched a plan to enhance its shareholding structure and pave the way for an Initial Public Offering (IPO) by 2012.
Daman's new strategy has apparently been developed in anticipation of new opportunities in the wake of the global credit crisis and has been designed to optimise the company's operations as the UAE economy returns to its positive stance which, according to conservative estimates, is expected to begin from late 2010.
When asked why the group would undertake such a programme in an as yet unclear market situation, the group Managing Director Shehab Gargash said, "We have taken a hard look at the markets and are confident that our long-term, positive view is justified. We are proceeding to enhance our shareholder base through a studied and measured approach beginning earlier this year and culminating in an IPO by the end of 2012."
Over the next three years, the original shareholder base of Daman will be increased from two million shares to a maximum of four million shares, thereby broadening the shareholder base and positioning the company financially to capitalise on market opportunities.
Economic recovery
Globally, after stagnant markets in the first two quarters, IPO activity started to pick-up in the second half of 2009, principally driven by deals from Asia and South America. These two regions raised $68.6 billion in listings in 2009 accounting for 72 per cent of the total IPO value, according to the update.
The number of deals for the 11 months was dramatically down in 2009, with only 459 IPOs listing (compared to 740 deals for the same time period in 2008). However, from 1 January to 30 November 2009, the capital raised globally was $94.9 billion, which is at parity with the amount raised in the 11 months of 2008 ($94.6 billion).
Gregory Ericksen, Global Vice Chair Strategic Growth Markets for Ernst & Young said, "Emerging market activity has dominated IPO markets this year with Chinese companies the largest source of total funds raised globally. Brazil's stock market has seen a flurry of activity, notably in financial services. China and Brazil are clearly playing an integral role in leading the global economic recovery."
© Banker Middle East 2010
There was not much activity on the Initial Public Offerings side of things in 2009. Will 2010 be better and will emerging markets and frontier markets take the lead, asks Mike Gallagher 2009 will not be remembered as the year of the IPO, not surprisingly, given that good news was hard to find, especially with real estate prices hitting the skids throughout the region, Sukuk going into default, stock markets plunging, oil prices bouncing all over the place and Kuwait almost seeing a run on its banks in the early part of the year.
Investors have been left almost comatose by the beating they have taken and the announcement that DP World was looking to list on the London Stock Exchange, after being disappointed by its performance on NASDAQ Dubai was another sign of the times. In March 2009 the Board of DP World said it would evaluate all available options to address its continued disappointment with the markets valuation of the company.
"After an extensive period of review with advisers, and discussions with shareholders, the Board of DP World has decided to seek a premium listing on the London Stock Exchange whilst maintaining the existing primary listing on NASDAQ Dubai. It is currently envisaged that we will seek admission for listing in the second quarter of 2010," the port operator said in a recent statement to the media.
"The company is trading at a substantial discount to its international peers," Rami Sidani, at Schroder Investment Management in Dubai told Bloomberg. "This move means more visibility for the company, as well as greater credibility as an international player."
Initial Public Offerings have been thin on the ground. Reflecting the general state of the regional IPO market, the year-end IPO update by Ernst & Young pointed out that total regional IPO deal values in all of 2009 came in at approximately one-sixth the value of all IPOs in 2008. Middle Eastern markets raised $2.06 billion from 15 IPOs until 25 November 2009 compared to $12.46 billion in all of 2008.
Of the four regional IPOs between October and November of 2009, three were Saudi Arabian insurance companies and one bank in Syria. Syria's Albaraka Bank was the biggest IPO raising $37.23 million followed by Saudi Arabia's Gulf General Cooperative Insurance Company (Al Khaleej Insurance) at $21.3 million. Al Alamiya Cooperative Insurance Company and Buruj Cooperative Insurance Company, both from Saudi Arabia, raised $16 million and $13.87million, respectively.
According to Phil Gandier, Managing Partner, Transaction Advisory Services, Ernst & Young Middle East, "In 2009 IPO activity was concentrated in three countries; Qatar raised $952.03 million, Saudi Arabia raised $1.03 billion and Syria raised $76.99 million in 2009. There has been no IPO activity in any other country in the Middle East in 2009. It is difficult to foresee with any certainty when the IPO activity will pick up even though as many as 114 IPOs have been announced."
Uncertainty continues to affect the markets, with some forecasts writing off 2010 in its entirety, however others are more optimistic and expect to see confidence returning before the end of the second half of the year. Mazaya Qatar Real Estate Development Company said that the IPO on its stock was scheduled for January 2010.
Saudi Arabia's Herfy Food Services is also said to be looking at a listing around eight million shares on the Tadawul in the early part of 2010 for around $20 million, perhaps reflecting an expected rise in the price of soft commodities. Zawya Dow Jones also reported that Al Aqeeq Real Estate Development Co. plans to increase its capital by 50 per cent and the sale of SAR 700 million ($186.64 million) Islamic bonds.
In Kuwait, Gulf Holding Company (GHC) hired CapCorp Investment Company as a consultant for listing its shares on the Kuwait Stock Exchange, although there was no word on when the listing was likely to take place.
Commitment
Mazaya Qatar said that its decision to offer its shares for public subscription reflects its "commitment to carrying out its planned strategy of developing ambitious real estate projects" and entering real estate consortiums in Qatar.
Libya could make headlines in 2010, just like Syria did in 2009 when it launched its stock market. The Libyan bourse went live in 2007 and according to a report by Global Investment House, a number of IPOs are planned in 2010. The report claims that the Libyan Government is going through "material changes" in its regulatory capital market authority to conform to the international norms, in order to attract regional, as well as international investors into the stock market in 2010. There are currently 10 listed companies on the Libyan Stock Market.
"The activation of the Libyan Stock Market is a move from Libya towards integrating its economy in the international economy," said Global.
Even Iraq's stock exchange (ISX) is seeing some activity. A report by Aswat al-Iraq noted that the ISX held 13 sessions in December 2009 during which 14 billion shares exchanged hands at 23.717 billion Iraqi dinars ($20 million). Non-Iraqi investors purchased 1.955 billion shares worth 3.610 billion Iraqi dinars while the number of shares sold by non Iraqis was 407 million worth 591 million Iraqi dinars.
Aswat al-Iraq reported that the ISX saw its first e-trading session on 19 April 2009 with five registered companies, three banks and two hotels. The banks were: Ashur International Bank (AIB), Al-Mansour Bank and the Iraqi Credit Bank while the hotels were: Ashtar Hotel and
Al-Mansour Hotel.
"On 7 June, the Iraqi Middle East Investment Bank and the Warka Bank joined the electronic trading sessions," Aswat al-Iraq said.
However, Metito, the UAE-based utilities provider, is unlikely to go for an IPO this year and may opt to concentrate on aggressive expansion first, according to a report in Emirates Business 24/7. "These are young investments so we have to spend enough time to grow them before we consider exits," Karim El Solh, Gulf Capital's Chief Executive told the newspaper. The Abu Dhabi-based private equity house owns Metito, which specialises in water treatment and desalination systems. "Plus the market will recover probably by 2011 so think of 2010 as the year of consolidation and growth; and by 2011-2012 we'll start exiting some of our investments," El Solh said.
Opportunities
In late 2009, Daman Investments launched a plan to enhance its shareholding structure and pave the way for an Initial Public Offering (IPO) by 2012.
Daman's new strategy has apparently been developed in anticipation of new opportunities in the wake of the global credit crisis and has been designed to optimise the company's operations as the UAE economy returns to its positive stance which, according to conservative estimates, is expected to begin from late 2010.
When asked why the group would undertake such a programme in an as yet unclear market situation, the group Managing Director Shehab Gargash said, "We have taken a hard look at the markets and are confident that our long-term, positive view is justified. We are proceeding to enhance our shareholder base through a studied and measured approach beginning earlier this year and culminating in an IPO by the end of 2012."
Over the next three years, the original shareholder base of Daman will be increased from two million shares to a maximum of four million shares, thereby broadening the shareholder base and positioning the company financially to capitalise on market opportunities.
Economic recovery
Globally, after stagnant markets in the first two quarters, IPO activity started to pick-up in the second half of 2009, principally driven by deals from Asia and South America. These two regions raised $68.6 billion in listings in 2009 accounting for 72 per cent of the total IPO value, according to the update.
The number of deals for the 11 months was dramatically down in 2009, with only 459 IPOs listing (compared to 740 deals for the same time period in 2008). However, from 1 January to 30 November 2009, the capital raised globally was $94.9 billion, which is at parity with the amount raised in the 11 months of 2008 ($94.6 billion).
Gregory Ericksen, Global Vice Chair Strategic Growth Markets for Ernst & Young said, "Emerging market activity has dominated IPO markets this year with Chinese companies the largest source of total funds raised globally. Brazil's stock market has seen a flurry of activity, notably in financial services. China and Brazil are clearly playing an integral role in leading the global economic recovery."
© Banker Middle East 2010
